San Francisco, March 10 (IANS) Shares in banks around the world have slid after troubles at one US bank triggered fears of a wider problem for the financial sector, BBC reported.
On Thursday, shares of Silicon Valley Bank (SVB), a key lender to technology start-ups, plunged after it announced plans to shore up its finances.
This had a knock-on effect, with the four largest US banks losing more than $50bn in market value.
Bank shares in Asia and Europe fell sharply on Friday, BBC reported.
Among the UK banks, HSBC shares fell 5.6 per cent while Barclay dropped 3.5 per cent.
SVB’s shares saw their biggest one-day drop on record on Thursday as they plunged by more than 60 per cent and lost another 20 per cent in after-hours trade.
The slide came a day after the bank announced a $2.25 billion share sale to boost its finances, BBC reported.
Hannah Chelkowski, founder of Blank Ventures, a fund that invests in financial technology said the situation was “wild”. She is advising companies in her portfolio to withdraw funds.
A crucial lender for early-stage businesses, SVB is the banking partner for nearly half of US venture-backed technology and healthcare companies that listed on stock markets last year.
“The banks are casualties of the hike in interest rates,” Ray Wang, founder and chief executive of Silicon Valley-based consultancy Constellation Research told the BBC.
“Nobody at Silicon Valley Bank and in a lot of places thought that these interest rate hikes would have lasted this long. And I think that’s really what happened. They bet wrong,” he added.
Russ Mould, investment director at AJ Bell, said the ripple effect of the problems at SVB showed these sorts of events “often hint at vulnerabilities in the wider system”, BBC reported.